New York Times review cost Tesla $100-million: CEO

By Nick Tragianis, Postmedia News

Originally published: February 26, 2013

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Just when the hatchet was buried in last week’s Model S vs. New York Times debacle, Tesla CEO Elon Musk put a dollar figure on how much the “fake” review cost.

In an interview with Bloomberg’s Betty Liu, Mr. Musk suggested John Broder’s review that found a Model S tester fall short of its estimated range cost the company nearly $100-million. Mr. Musk alleged the review was “fake” and sabotaged, but the New York Times public editor said that although Mr. Broder didn’t take proper notes and didn’t follow Tesla’s guidelines, he did the test in good faith.

“We did actually get a lot of cancellations as a result of the New York Times article,” Mr. Musk said in the interview. “It probably affected us to the tune of tens of millions, if not on the order of $100-million, so it’s not trivial.”

Ms. Liu did some quick math and attributed the loss to nearly 1,000 cancelled Model S orders, but Mr. Musk quickly attributed the loss to the brand’s equity as well as cancellations.

“It wasn’t as though there were 1,000 cancellations due to the New York Times article,” he said, putting the number of cancellations to “probably a few hundred.”

In the days following the review, Tesla shares fell from $39.48 on Feb. 7, the day before Mr. Boder’s review was published, to yesterday’s close of $34.43.

Unlike most manufacturers, sales data is unavailable, making it difficult to determine whether or not Mr. Musk’s statement is accurate. However, last week Tesla announced a Q4 profit jump of 500% to $306-million over the previous quarter and posted a $90-million loss. Negative press notwithstanding, Tesla already met its production goals of 400 cars per week, and hopes to meet its 20,000-units-per-year goal by the end of 2013.

Recently, Kelley Blue Book attempted a drive from Los Angeles to Las Vegas. While the team encountered a flat tire and had to make a detour to a Tesla service station, they did eventually make it to Las Vegas after a few tense moments with range to spare. The video below gives an in-depth and fair look at Kelley Blue Book’s road trip and the Model S’ features and drawbacks.